Monday, August 23, 2010

Global Investment House v National Bank of Umm AlQaiwain: NBUQ Deposits US$250 Million with Dubai Court


National Bank of Umm al Qaiwain ("NBUQ" or "NBQ", if you prefer) announced on the Abu Dhabi Stock Exchange this morning (23 August) that earlier this morning (the 23rd) it had deposited the US$250 million which is the subject of the lawsuit between it and Global with the Dubai Court.   It went on to note that previously the amount had been on deposit with the Central Bank of the UAE.  

NBUQ described this step as evidence of its good intentions in the matter.   It also noted that it had appealed the verdict of the Dubai Court of First Instance in Global's favor.  The first session of the Appeals Court is scheduled for 29 September.

As I've posted before, if NBUQ can drag the proceedings out, the pressure increases on Global to reach a compromise since it's facing a looming cash crunch due to the unrealistic and unprofessional repayment schedule imposed on Global by its "wise" lenders.  With markets as they are asset sales are difficult.   And the price of an asset fire sale probably much more than paying a break-up fee and forgiving the interest on the "deposit" (if you're Global) or "prepayment" (if you're NBUQ). 

Previous posts can be accessed using the tags "National Bank of Umm AlQaiwain"  or "Global Investment House Kuwait".

6 comments:

Laocowboy2 said...

Cannot remember the original details of the Global offer to NBUQ. Price? And compared to market for NBUQ shares today? Someone is going to take a large hit here - real for Global if they lose or opportunity cost for NBUQ if they lose. Nothing particular negative to say about NBUQ but as with all banks (esp UAE) SP is well down on the boom years.

Abu 'Arqala said...

LC2

At AED7.15 or so per share (an AED 6.15 premium over par) as per NBUQ's annual report quoted here.

http://suqalmal.blogspot.com/2010/02/global-investment-house-v-national-bank.html

Investment was to be made in convertible securities --the downfall of many an investor in the UAE due to poor transaction and legal structuring as appears to be the case here. To paraphrase the old JPM slogan "Second rate business in a third rate way".

NBQ closed at AED2.49 yesterday.

laocowboy2 said...

Many thanks - if Global lose then that is a roughly US$160mn hole in the balance sheet. Ouch! Although as they are the people that brought us Mazaya, my sympathy is limited.

Abu 'Arqala said...

LC2

According to the Prospectus for AlThourayia, Mazaya had an absolute advantage in the real estate business as is perhaps demonstrated by their participation in The Villa.

Rare for companies to be in such a position.

Vanguard said...

AA,

your last comment cracked me up

Abu 'Arqala said...

Vanguard

Thanks your comment and what I'm reading as a compliment.

You know long ago I was told that unlike other religions there were no miracles in Islam except for the Qur'an.

Yet, today, I've seen another "miracle" though in the world of "Islamic" banking - so that first statement may still hold true.

http://suqalmal.blogspot.com/2010/08/gulf-finance-house-1h10-financials-now.html